10 Am I the only one wondering if this affects the contractor's taxes too? If I receive money through PayPal for freelance work, and PayPal takes their cut, do I report the amount before or after fees on MY taxes?

This is exactly the kind of confusion that trips up so many small business owners! I went through the same thing when I started my consulting business. The key thing to remember is that you're essentially dealing with two separate transactions happening at once. For your 1099 reporting, always use the gross amount ($1250) - that's what you actually paid for services. The PayPal fee is YOUR business expense, not your contractor's. So on your Schedule C, you'll deduct the full $1250 as contract labor AND separately deduct the $37.50 as a payment processing fee. Your contractor will report only what they received ($1212.50) as income, but they can also deduct any processing fees on their end if applicable. This way everyone's books balance correctly and you're both following proper tax procedures. I'd recommend keeping detailed records of all your PayPal transactions - download the monthly statements and highlight these fees so you don't miss any deductions come tax time!

Just curious - does anyone here use specific tax software that handles booth rental situations well? I'm currently using TurboSelf-Employed but it keeps asking me questions that don't really apply to my situation as a booth renter in a barber shop.

As someone who's dealt with similar confusion about booth rental arrangements, I want to emphasize that what you're describing is absolutely legitimate. The key distinction is that you're operating as an independent business owner who simply rents physical space - you're not an employee of the salon. The IRS uses the "ABC test" in many cases: (A) you're free from control and direction, (B) your work is outside the usual course of the hiring entity's business, and (C) you're customarily engaged in an independently established trade. Your situation clearly meets all three criteria. Those people commenting on the ad are likely thinking of situations where salons misclassify actual employees as contractors to avoid paying payroll taxes and benefits. That's completely different from legitimate booth rental where you maintain full business autonomy. The fact that the previous owner passed an audit is strong evidence that this arrangement is properly structured. Keep documenting your independent business operations and don't let uninformed opinions create unnecessary anxiety about a perfectly legal business model.

3 Does anyone know if tax-loss harvesting would help in this situation? I have some underwater investments I could sell to generate losses. Would those offset the capital gains before determining what rate applies?

Great discussion everyone! One thing I'd add is the importance of considering the Net Investment Income Tax (NIIT) when planning large capital gains realizations. If your modified adjusted gross income exceeds $200,000 (single filer), you'll pay an additional 3.8% tax on investment income including capital gains. With the scenario described ($42K regular income + $380K gains + $63K dividends), you'd definitely hit this threshold and pay NIIT on the investment income portion. This effectively makes your capital gains rate 18.8% instead of 15% on most of those gains. It's another reason why spreading the sales across multiple years could be beneficial - you might be able to stay under the NIIT threshold in some years. Also worth noting that if you're subject to NIIT, it applies to the lesser of: (1) your net investment income, or (2) the amount by which your MAGI exceeds the threshold. So careful planning around that $200K line can make a real difference.

As someone who's dealt with parental SSA issues, make sure to check if the repayment is related to overpayment due to workers comp or disability payments. My father received both workers comp and social security disability for a period, and there was an offset that created a similar Box 4 situation. Also, if you're helping with taxes after a death, remember to look into filing a final tax return for the deceased (Form 1040) and potentially Form 1041 if there's an estate. The SSA-1099 Box 4 repayment should be reported on the decedent's final return.

I'm sorry for your neighbor's loss. Dealing with financial matters during grief is never easy, and it's thoughtful of you to help them prepare before meeting with your site coordinator. Based on what you've described, the substantial Box 4 repayments for both parents suggest this might be a systematic issue rather than individual overpayments. A few things to consider asking your neighbor: 1) Did either parent receive any official notices from Social Security in 2023 or early 2024 about benefit adjustments or overpayments? 2) Were there any significant life events in 2022-2023 that might have affected their benefits - large retirement account withdrawals, property sales, changes in other income sources? 3) Did either parent work while receiving benefits, even minimally? The timing is also important - if these repayments relate to the father's benefits and he just passed away, the widow may need to understand how this affects survivor benefit calculations. The SSA will need to be contacted anyway to transition her to survivor benefits, so they can clarify the Box 4 amounts at the same time. For your VITA preparation, I'd suggest gathering their 2022 and 2023 tax returns, any SSA correspondence from the past two years, and information about major financial transactions in 2022. This will give your site coordinator a complete picture to work with.

23 Man, being rich enough to choose where you live for tax purposes. Must be nice! Meanwhile I'm over here stressing about claiming my $400 side gig on my taxes lol.

This is such a fascinating topic! I had no idea that professional athletes had to deal with such complex international tax situations. It really puts into perspective how much administrative work goes into being a global sports star - not just the training and competing, but having to navigate tax laws in dozens of countries. It's interesting that even living in Monaco doesn't completely eliminate tax obligations. I always assumed that was the whole point of athletes moving there, but it sounds like they're still paying substantial taxes to every country where they earn income. The endorsement income allocation based on competition days is particularly complex - I can see why there would be disputes between athletes and tax authorities over those calculations. Thanks to everyone who shared their experiences with the various tax tools and services. As someone who occasionally does freelance work across state lines, I can only imagine how much more complicated it gets at the international level with different tax treaties and regulations.